Irish

Friday 25 July 2014

KfW deal to fund Irish firms was months in the planning

Colm Kelpie

Published 08/01/2014|02:30

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German Chancellor Angela Merkel
German Chancellor Angela Merkel

THE Department of Finance had been in discussions with German development bank KfW at least eight months before it was announced that the state-backed lender would provide funding to Irish SMEs, the Irish Independent has learned.

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Secretary general John Moran first met the chairman of the bank at a dinner in Dublin last spring as part of Ireland's EU presidency.

A series of meetings were then held in June in Berlin involving a senior figure from the bank, German finance ministry officials and junior finance minister Steffen Kampeter.

German Chancellor Angela Merkel has instructed her state investment bank to work closely with the Irish authorities to boost funding for the economy, including access to finance for small and medium businesses.

Loans may also be made available for investment, infrastructure and for larger companies.

The development is intended to result in Irish firms borrowing money at a cheaper interest rate than is offered by Irish banks.

The announcement of KfW's involvement was made in the Dail in November by Taoiseach Enda Kenny, when he revealed that the State would not be applying for a precautionary credit line.

But details from Mr Moran's diary reveal the early efforts made by the department in exploring options with the development bank.

The Department of Finance's most senior civil servant first met with Dr Ulrich Schroder, KfW's chairman, at a dinner organised by European think-tank Eurofi in Dublin in April, during Ireland's presidency of the European Union.

Mr Moran then flew to Berlin on June 13, where he met Dr Lutz-Christian Funke, director of business strategy at KfW, according to Mr Moran's diary.

Meetings were also held with officials at the German Federal Finance Ministry and with state secretary Steffen Kampeter on the same June day.

PRECAUTIONARY

These discussions preceded the later talks between the Taoiseach and Ms Merkel, during which the deal was agreed.

Following that conversation, Mr Moran sought further meetings.The money comes at a cheaper rate because KfW is a triple-A rated bank, so it can borrow money more cheaply and then pass this on to its customers.

The loans will be funnelled through the National Treasury Management Agency and the new Strategic Investment Fund or the State-owned banks, AIB and Permanent TSB.

Department of Finance officials have already exchanged working papers with KfW.

Irish Independent

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